A resource companion to "Community-Owned Businesses: How Communities Become Entrepreneurs" (Main Street Now, April 2010).

Small owner groups

Small investor groups, whether partnerships or closely-held corporations, are the most nimble and flexible of the possible community-owned business structures. They can act quickly and with a minimum of process. The small-group aspect lessens the risk to each individual investor so it is acceptable to him or her. Assuming the members of the group bring money as one of their chief resources, a business can raise capital relatively quickly.

In addition, the tight control offered by a small ownership group helps avoid “owner-agent” problems: because the owners are likely to be actively involved in the business, they are also likely to be involved in, and support, day-to-day operations decisions. (In a cooperative or community-owned model, because of the number of shareholders, the owners are further removed from the general manager’s motivations and decision-making.)

The following businesses are capitalized and/or managed by small groups of community-minded investors.

Claire's Restaurant (Hardwick, VT) raised part of its capital from community members.Fifty investors put in $1,000 each and their loans will be repaid through discounted meals over four years.

Cops & Doughnuts (Clare, Michigan) gave new life to the Clare City Bakery in 2009 when the local police department (acting as individual civilians) organized to save the local institution as it was planning to close.

Elements, a vegetarian restaurant planned to open in Washington, DC, will have a single owner, but is using community-based "crowdsourcing" techniques to develop the concept and menu.

Firefly Grill (Effingham, IL) was capitalized, in part, with financing from 18 local business people.

"mio", for "made in oakland", is a storefront-based apparel design and manufacturingbusiness in Oakland, CA. It was capitalized by a local CDC and a grant from the US Dept. of Health & Human Services, and it has an established mentoring relationship with a for-profit partner.

The Community Land Use and Economics Group, LLC (CLUE Group)

We help local and state governments, developers, and nonprofits design innovative downtown economic development strategies, cultivate independent businesses, recycle historic buildings, attract young talent, strengthen downtown management programs, and craft planning and land use tools that mitigate sprawl and stimulate town center development.